The Universal Living Wage (ULW) is a simple three-pronged formula:
– Work a week of 40 hours.
– Spend no more than 30% of income on housing
– Index the minimum wage to the local cost of housing throughout the United States
Let’s take a brief look at each of these three tips that make up the concepts behind the mathematical formula.
Work a 40 hour week
First, we are talking about wages and the government’s standard work week (40 hours). While we’re talking in terms of being able to afford a home on a monthly basis, it’s important to understand that just as the Federal Minimum Wage (FMW) is an *hourly wage*, the ULW is also an hourly wage. What we’re saying is that if you put together 40 units of salary from work, four times a month (four weeks in a month), that salary would be enough for a person to afford basic rental housing no matter where that person works in all United States. states. This may require a 20-hour-per-week part-time worker to get a second additional 20-hour part-time job to accumulate 40 units of work, etc.
Spending no more than 30% of one’s income on housing
The United States Department of Housing and Urban Development (HUD) is the department of the United States Government that deals with housing-related matters. It was established in the 1970s. It uses this 30% standard as a guide to create its Section 8 Housing Voucher Program.
Also, banking institutions in the United States use the same guidelines. If you applied to purchase a home and the bank determined that by doing so you would be spending more than 30% of your monthly household budget on the mortgage payment, they would not issue you a note or give you a mortgage.
Index the Minimum Wage to the Local Cost of Housing
The US government established the Federal Poverty Guideline as a poverty standard and currently uses food costs as the basis for it. Food, however, is a flexible commodity. Housing is not, making housing or the lack of it, the true objective/necessity required to attack poverty.
The housing we are referring to is the most basic rental housing available. Once again, we suggest a minimum wage that would allow a person to rent an efficient apartment. An efficiency apartment is a step below a one-bedroom apartment. In an efficient apartment, you’d find a single room that could allow for a pull-out “Murphy” bed or sofa and serve as a kitchen, living room, and bedroom. You can find room for a hot plate and a shared bathroom down the hall. This is the rarest of conditions.
HUD has a rental voucher program where it subsidizes landlords. This is called the HUD Section 8 Voucher Rental Program. Let me explain the program to you. Suppose a one-bedroom apartment rents for $600.00 in your area. However, suppose that people in your area who need a one-bedroom apartment cannot afford more than $400.00. The federal government steps in and provides a $200.00 housing voucher that the tenant passes on to the landlord. This is a win-win situation for both the landlord and the tenant. The Tenant obtains the housing that he needs and the Owner obtains the desired income. However, the taxpayer is required to pay the bill.
In order for the federal government to determine what value to assign to the voucher, it has designed a program called HUD’s Fair Market Rents (FMR) that travels the country and determines what one would have to pay to rent an efficiency vehicle. , a one-bedroom, two-bedroom, three-bedroom or four-bedroom apartment in any particular area. HUD does this by using a sophisticated formula that helps them review these amounts annually, though not necessarily making yearly adjustments. There is also a two-year lag before new homes are factored into the equation. HUD’s fair market rental areas are roughly the size of counties, and are often exactly that: counties.
RMF standard
FMRs are estimates of gross rent; they include the rent of the dwelling and the cost of public services, except for the telephone. HUD establishes FMRs to ensure that there is a sufficient supply of rental housing available for program participants. To achieve this goal, FMRs must be high enough to allow for a selection of units and neighborhoods and low enough to serve as many families as possible. The level at which FMRs are set is expressed as a percentage point within the rent distribution of standard quality rental housing units.
As of April 2010, the current definition used is 40 or 50 percent of the rent for standard quality rental housing units. These percentiles are drawn from the distribution of units that are occupied by recent movers (renter households that moved into your unit in the last 15 months). New construction units less than two years old are excluded, and adjustments have been made to correct below-market rents for public housing units included in the database.
By combining these three existing government guidelines: 1. work 40 hours a week; 2. spend no more than 30% of income on housing; 3. indexing the minimum to the local cost of housing, we created a mathematical formula that ensures that if a person works 40 hours a week, their income would be enough to pay for basic rental housing wherever that work is done throughout the USA.
We have stated that we want a full-time worker to be able to afford basic rental housing. This will position the minimum wage worker so that he or she can pursue additional education or the American Dream or both.
Effect of ULW on Businesses and Taxpayers
Where there are workers and bosses, there is a symbiotic relationship, which is bordered by a delicate framework. The employer needs the employee for his job and the employee needs to earn at least a minimal living through employment. While the need is mutual, the balance of power is not, and therefore workers should expect the employer to adopt the principles of the Universal Living Wage formula. This formula ensures that if an employee works a standard number of hours, that employee should, because of the job, be able to pay for basic life-sustaining needs (food, clothing, housing, and access to health care). This is consistent with the United Nations document, the Universal Declaration of Human Rights, which identifies these vital needs as “definitive components of the right to a minimum standard of life and dignity for every state (nation)”.
Copyright 2010 by Richard R. Troxell. All rights reserved. Creative Commons: Feel free to duplicate or distribute this file as long as the excerpt has not been modified and this copyright notice is intact. Thank you!